How to get rid of a director?

What are the ways that a company can get rid of a director?

Can they just remove him by majority vote? If so does he revert to employee status?

If they wanted to terminate him from the company is he entitled to redundancy?

The person was appointed during boom times to run a section of the business that was expanding at the time. Now the company is struggling and would like to get him off the payroll and close that section. The company cant afford a big payout, what is the best way to go about this?

So he's a director and an employee? Different considerations apply for each position. If he's a director, then the rules about removing directors will be in your Articles of Association - sometimes it can just be by board resolution, but you may have to go to the shareholders.

As an employee, if he has been working for you for longer than a year, then the Unfair Dismissals Act applies and the company could be liable if you don't follow the right procedures. It sounds like a redundancy situation to me if you are closing the entire section but you'll have to get proper advice on that front and follow the rules in the UDA for cases of redundancy. A genuine redundancy shouldn't cost the company that much.

At the moment, he's both a director and an employee - removing him as a director doesn't make him "revert" to anything. Someone can be a director or an employee or both at the same time. You don't lose employment rights if you are also a director.

If someone is a director and employee, you should have a clause in their contract of directorship/employment saying that he'll resign from the board if his employment is terminated for any reason (late advice probably, but bear in mind for next time)

Sprite

Redundancy is the way forward.

See calculator on government web site: http://www.entemp.ie/employment/redundancy/calculator.htm

your company will recieve 60% of payment back from the government.

Once he is off the payroll, it will be in his own interests to resign as a director.

I'm assuming he's not a shareholder.

Thanks for the advice. Its a bit unfortunate but I think in the current climate there will be a lot of this type of thing!

We have a similar scenario.

Can you make someone redundant and then still give the rest of the staff an annual increase? Could this get us in the labour courts?

Chiggles

If you are closing a division or actually eliminating a position, you can make someone redundant even if you are giving pay rises elsewhere. If your argument is that money is tight and you simply can't afford one person, then being flathuileach with *everybody* else will look a little incongruous. Is this a genuine redundancy or do you just want to terminate one particular employee?

Sprite

Hi all

Does any of this apply if the director is a 50% shareholder and employee but really not up to the job?

A 50% shareholder will still be a 50% shareholder even if no longer a director. Unless the other 50% shareholder wants to buy them out. Remember a 50% shareholder in the company they are a director of and working in is classed as a self-employed person. ( Class S PRSI etc.)

A 50% shareholder is also effectively his own boss too! can't really do anything w/out his agreement!

Thanks guys. That's what I thought .. unfortunately

Is it not possible to value the assets of the company and then wind down and start a new company though? He may then be entitled to the share at that time? but not with the new company. I guess you could probably transfer everything to the new company? Any ideas any one? Thanks

j123 said:

Is it not possible to value the assets of the company and then wind down and start a new company though? He may then be entitled to the share at that time? but not with the new company. I guess you could probably transfer everything to the new company? Any ideas any one? Thanks

Click to expand...

In general your idea is possible!